The problem of capacitor allocation in electric distribution systems involv
es maximizing energy and peak power (demand) loss reductions by means of ca
pacitor installations. This paper presents a novel approach using approxima
te reasoning to determine suitable candidate nodes in a distribution system
for capacitor placement. Voltages and power loss reduction indices of dist
ribution system nodes are modeled by fuzzy membership functions. A fuzzy ex
pert system (FES) containing a set of heuristic rules is then used to deter
mine the capacitor placement suitability of each node in the distribution s
ystem. Capacitors are placed on the nodes with the highest suitability. Sim
ulation results show the advantages of this approach over previous capacito
r placement algorithms.